Don't Look for Rate Cuts in '19: Fed

A divided U.S. central bank appears to have pooh-poohed any idea of interest rate cuts at least until New Year 2020.

The Federal Reserve held the line on interest rates Wednesday and indicated that no cuts are coming in for the rest of the years. The decision came amid divisions over what is ahead and still leaves open the possibility that policy loosening could happen before the end of the year depending on how conditions unfold.

The Fed expects one or two rate cuts, but not until 2020. Despite cautious wording in the post-meeting statement Wednesday, markets are still betting the Fed cuts, as soon as July.

In a decision closely watched by financial market participants clamoring for multiple cuts, central bank officials on the Federal Open Market Committee voted nine to one to keep the benchmark rate in a target range of 2.25% to 2.5%, where it has been since December’s controversial quarter-point increase. One member, St. Louis Fed President James Bullard, voted to reduce the rate.

The decision will set up a possible confrontation between Fed Chairman Jerome Powell and President Donald Trump, who has been pressuring the Fed to cut rates. Just Tuesday, Trump said "let’s see what he does" at the Fed meeting when asked if he still wants to demote Powell.